LNG Tide Lifts Novatek's Q2 Result

Russian independent producer Novatek reported revenues of rubles 218.5 ($3.4)bn in the second quarter and normalised pre-tax earnings (Ebitda), including those from joint ventures, of rubles 115.8bn. These were up 11.6% and 14.3%, respectively, on Q2 2018.

The increases in total revenues and Ebitda were largely due to the production launch at the second and third LNG trains at Yamal LNG in the second half of 2018, it said. 

The profit was boosted by the sale of a 10% stake in Arctic LNG 2 project in March for rubles 308.6bn and the recognition of non-cash foreign exchange effects on foreign currency denominated loans.

Excluding these effects, shareholders earned roubles 64.3bn in the second quarter, up 18.4% on Q2 2018. Capital expenditure rose to rubles 31.2bn, or by 41.5%, in the second quarter of 2019, mainly owing to the development of Arctic LNG 2  and the LNG construction centre in the Murmansk region, as well as the North-Russkoye field and crude oil deposits of the East-Tarkosalinskoye and the Yarudeyskoye fields.

Total natural gas production, including our proportionate share in the production of joint ventures, for the second quarter rose 15.2%.

Novatek sold 18.8bn m³ of gas, up 23.9% on Q2 2018, owing to LNG sales volumes purchased from our joint ventures Yamal LNG and Cryogas-Vysotsk. It did not comment however on the profitability of those sales: LNG wholesale prices have hit long-term lows in Asia and Europe on a continuing wave over oversupply.